Publications

Sustainable Development and Business

Markus Kallifatides and Lin Lerpold (eds.) SIR 2017

Sustainable development has a long history with many different roots. The most widely agreed upon definition, ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs’, includes the three main pillars of economic growth, environmental protection and social equality. Recognizing the tradeoffs and the difficulties in operationalizing the definition, the different chapters in this volume reflect different aspects of the pillars. The twelve chapters, illustrating different roots in research on sustainable development and business, can all be connected to an interpretation of the seminal modern definition.

What if economic growth is inherently unsustainable? What if economic growth, as hitherto defined, is not possible while respecting planetary boundaries and the social capacity of human beings? And what if further economic growth is not achievable under any circumstances, at least in the affluent parts of the world? Moreover, as many sustainability researchers have posited, there may be inherent conflict between development in the socioeconomic and natural worlds.

We do not claim to know exactly how to answer these observations from the outset. However, we do claim that in our times it would seem wise to maintain an open mind about most things, including how the production of goods and services for human consumption may be organized while leaving the planet in (at least) habitable condition for future generations. ‘Business as usual’ in the legacy of Adam Smith’s benefits of the ‘invisible hand’ may not be a wise choice in a world of refugee crises, climate change, biodiversity loss and persistent poverty among a growing world population. We suggest that ultimately neither ‘citizenship as usual’ nor ‘research as usual’ are viable options.

In this volume the authors describe how corporate governance takes place in practice in large Nordic companies. The empirical results and conclusions are based on an extensive in-depth study of 36 mid- and large cap corporations involving some 250 owners, board members (including Chairs), and CEOs. Three major conclusions can be drawn from the rich material.

Firstly, the authors show that a company’s total ownership situation to a large extent determines how the governance process is organized and executed. The ownership dimension that matters most is its structure (concentrated or fragmented shareholding). However, whether a corporation is owned privately or by the state also matters, as does the personality of the controlling/main owner (e.g., risk seeker or risk averse) and the owner’s personal involvement in the operational and financial flows (i.e., contribution to the different corporate bodies). All those governance qualities are crucial in the Nordic environment, where most corporations tend to have controlling/main shareholders.

Secondly, it is obvious that each corporation has the opportunity to ‘tailor’ its own governance process and that the owners actually also use that possibility. Such an option exists because the Nordic Company Laws allow considerable degrees of freedom in terms of interpretation, and the complementary soft regulations are not binding.

Thirdly, the empirical material in this extensive study lends support to the notion that what is really decisive for how the different corporations develop over time is how ownership control is captured, organized and executed. Thus, of particular importance is which owners control a company and how they act, that is, what ideas, competences, time horizons and ways of thinking dominate the governance process.

Rethinking Corporate Governance. The Forming of Operative and Financial Strategies in Global Corporations.

Sven-Erik Sjöstrand, Edward Elgar Publishing, 2016

Rethinking Corporate Governance’s extensive and insightful empirical investigation offers a radically new approach to corporate governance. This ground-breaking volume describes and analyses the key nature-based and actor-based forces that ultimately determine corporate governance processes and long-term corporate paths. Generally, such forces work in complex and intricate interplays that to a large extent vary among corporations.

A theory of shareholder governance is developed and integrated into the established – and more comprehensive – theory of corporate governance to create a revised theory of the corporation (firm). The new possibilities that this creates for explaining how processes develop and ultimately influence corporate paths are presented in depth. Featuring conclusions based on an empirical material that is both rich and exclusive, the book also contains extensive non- anonymized materials from authentic corporate governance processes. A general conclusion is that actions taken by individuals have a special status among those forces, as they not only generate impact in themselves, but also involve interpretations of the possible effects of all the other forces. Among those actions, the ones taken by the shareholders stand out as particularly decisive both for the governance processes as such and for how corporations develop over time.

Offering a degree of openness, detail and realism that is hard to find in any other case-based study, this innovative and enlightening volume is essential for both academics and practitioners involved in corporate governance, corporate strategy and the theory of the firm.

This article offers a political perspective on modifications in corporate governance regulation. In the wake of the financial crisis, the investment rationale of institutional investors is being pushed away from a focus on financial market liquidity and short-term trading. From a political perspective, this modification entails consideration both of investment horizon and of the definition of corporate value.

The article narrates the historical policy debate on institutional investors as corporate governors. Building on this point, we develop a conceptual framework to further our understanding of the current shifts in policy debate of institutional investors as governors. We find a strong policy impetus to move away from certain liberal market assumptions of efficient financial markets and the positive effects of privatization, toward viewing markets as institutionally embedded.

Based on our knowledge of corporate governance regimes’ political economy, we argue that this shift brings intensified engagement of institutional investors in corporate affairs. We specify the reasons for why and how this might be politically contested. In conclusion, we offer propositions regarding the outcome of such contestation in different national corporate governance regimes.

What do companies do when they practise CSR? It is this very empirical question that stands in the spotlight in this book chapter. We present a study of a project that the company in question presented and publicly highlighted as an example of CSR in practice: an electrification project that ABB, a multinational company, carried out in a village in rural Tanzania.

An Institutional Analysis of Cross-border Hostile Takeovers

Taking a sociological perspective on the market for corporate control this thesis calls into question financial capitalism with its preference for clear shareholder-value governance of the corporation. The institutional setting chosen to show this is Sweden, with its particularly shareholder friendly governance regime and its very active takeover market. To this is added three longitudinal case studies of cross-border hostile takeover processes during the sixth takeover wave in Europe.

These reveal that the success of cross-border hostile bids has little to do with the theory of the market for corporate control, as a market where contests enable "good managers" to win over "bad managers", with the overarching goal of enhancing wealth creation for society at large. Instead the most successful actors on a market for corporate control are those who best understand that market's power dynamics - including the use of regulatory and moral arbitrage between different national frameworks and the leveraging of short-termism of institutional investors.

The case studies are then analyzed in relation to the revised Swedish takeover rules of 2009. This shows that the revision did not address the problems detected, focusing instead on enhancing deal making and further limiting the board's ability to work for long term value creation. As a whole this thesis calls for a development of a theory of a market for corporate control that in a more sustainable way will enable board of directors to focus on the corporation as value accretive entity.

How Changes in Managers' Sensemaking Influences a Strategic Change

The study builds on the belief that change has become a normal state of affairs in business life, and that one highly contemporary actor - the private equity firm - has evolved to become specialized in change through repetitively changing its portfolio firms in its quest to generate value. The quest of reshaping a portfolio firm in order to optimize its strategic position, profitability, and financial structure in order to generate value has consequently been this study's starting point.

This dissertation presents how sense making, which is about the interplay of action and interpretation, changes over time and how it affects the strategic change of a portfolio firm. By studying and directly observing the communication and interaction between the portfolio firms's CEO, board, and management team in real-time during a prolonged period when change occurs at a revolutionary pace, this dissertation seeks to examine the development and influence of this sense making.

The study demonstrates how certain traits of private equity firms influence the timeline, risk profile, and governance of strategic change, how the presence of an idiosyncratic language influences the strategic change by transcending one mindset into a diametrically opposed ditto, and how the materialization of a mental iron cage affects the boundaries of the potential changes as well as adaptations and worldviews.

"Crisis and hyper-ideological (Un)consciousness"

The purpose of the article is to elaborate a position in debates on management teaching by properly remembering the origins of the agency theory of the firm. In a speculative piece, the precise role of agency theory in ongoing global financial crisis is conceptualized as carrier of hyper-ideological (un)consciousness.

This insightful book focuses upon corporate governance processes, and explores the conditions required for effective corporate governance and control in 21st century globalized and financialized economies. In presenting a comprehensive study of a cross-border hostile corporate take-over process, describing the actors, institutions and events involved, this book examines and questions the current forms of corporate governance and control - both from a national and a global perspective. Using Old Mutual's takeover of Skandia as a case study, the authors address corporate governance theory, and highlight its two fundamental dimensions: financial and operational flows.

An important conclusion of the book is that the motives and theories of contemporary financial markets appear to have gained in importance at the expense of the corresponding operational considerations, something that has dramatically changed the rationales of different types of actors. The book critically questions these transformations, calling for the reconsideration and redesign of regulating institutions and corporate governance processes.

This critical investigation of the competition for corporate control in the era of modern financial capitalism will prove a fascinating read for students, academics and researchers in the fields of corporate governance, finance and international business. It will also appeal to policymakers and practitioners within the realms of corporate finance, banking and the wider financial services industry.